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For the fifth time since May 2020, Finnair has upped its target for permanent cost reductions. The carrier now wants to realize €200 million in reductions in 2022 compared to the original €80 million targeted last year, it said on July 15 during its HY1-results presentation. Finnair ups its cost reduction targets for 2022.

Finnair reported a €265.5 million loss for the January-June period compared to a negative €314.6 million in the same period last year. The operating result was minus €288.2 million (€-266.8 million). Total revenues were €225.4 million versus €629.8 million. Passenger revenues were down by 79 percent to €88.1 million, but cargo revenues were up by 41.8 percent to €122.2 million.

The second quarter saw a €120.1 million net loss compared to €172.1 million last year. Revenues were up by 63 percent to €111.8 million as the number of passengers increased by 197.6 percent to still a much-reduced 291.600. Thanks to lower financial expenses and exchange gains, the loss before taxes was 30 percent better at €150.2 million.

While demand has picked up, travel restrictions across Europe have been lifted at a slower pace than expected as the Delta-variant of the Covid-virus has become dominant in a number of countries. Europe accounted for 59 percent of Finnair’s Q2 revenue passenger kilometers (RPK). The recovery of the important market in Asia is lagging behind, with RPKs at just 20 percent. Traffic there continues to be very limited. The airline operated cargo services with only a limited number of passengers on board to Asia in Q2.
New York was reopened in March, as were services to Chicago and Los Angeles in June. In Q2, Finnair continued to operate a limited network. Only in Q3, it has added capacity as the summer period has opened up. Bookings for Q4 look promising and are already at June levels.

Finnair goes for void in Stockholm

As reported, Finnair will commence point-to-point leisure services out of Stockholm (Sweden) in October to Bangkok, Phuket, and Miami as it is “tapping into the opportunities in the market.” CEO Topi Manner said that Finnair is going for the void that has been left by Norwegian after they dropped out of long-haul services. This means there should be a market for flights out of Stockholm to Asia. The new services (fifteen weekly departures) will test the important Swedish market but Manner said it is most likely that his airline will expand its base at Stockholm Arlanda after the coming winter season.

Stockholm is set to become a major base for Finnair. (Stockholm Arlanda Airport)

Flights will be operated by regular Finnair pilots, as their unions approved the plan. Cabin crew unions opposed the plan to be based in Stockholm, however, so the airline is sourcing cabin attendants from Airpro. Manner said that positions are offered to Finnair attendants who have been furloughed.

Finnair also wants to grow its presence in Shanghai together with Chinese carrier Juneyao, which started a joint business partnership on July 1. Longer-term, the plan is that both airlines will jointly operate four weekly services between Helsinki and Shanghai, double that of the current level.

Finnair is likely to be cash positive by the end of 2021

With continued uncertainties, Finnair is unable to provide guidance on its full-year results. The net result for Q3 will likely be at identical levels as in the last five quarters, partly caused by the incremental costs of adding capacity. However, there might be a bright spot. The carrier expects to become cash-flow positive again by the end of the year from €-59.3 million in Q2.  

Still, Finnair ups its cost reduction target for 2022. Its previous target of €170 million in reductions announced in April will be exceeded. A new target has been set of €200 million in 2022 based on 2019 volumes. Of this, €125 million will be volume-driven cost reductions and €75 million fixed costs. They include areas as real estate, aircraft leasing, IT, sales and administration, and compensation structures. Also will the indefinite and temporary layoffs of staff continue.

The airline’s cash funds improved to €834.3 million, mainly to a new unsecured senior bond of €400 million. It also has an unsecured hybrid loan of €400 million available that the government has provided in Q1, but based on a state aid decision by the European Commission, only €350 million is available to the carrier. The remaining €50 million will only be available after approval from Brussels. Finnair also has another €175 million revolving credit facility at its disposal, which currently is fully undrawn. Total interest-bearing net debt stood at €1.587 billion in June.

The airline offered no updates on its fleet plans. It has only three aircraft on order: three Airbus A350-900s, which are due in Q2 2022, Q4 2024, and Q1 2025. Through staggered maturities of 29 leased aircraft (another thirty are owned), it is able to adjust capacity according to demand.


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Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
In 2022, he has gone full-time freelance. Richard has been contributing to AirInsight since December 2018. He is also writing for Airliner World and Aviation News and until July 1 2023 in a part-time role with Dutch website and magazine Luchtvaartnieuws. Twitter: @rschuur_aero.

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